By Bernie Becker - 08/29/11 04:06 PM EDT
Consumption taxes such as the Value Added Tax — in which a levy is essentially added at every stage of manufacturing and production — are used in many other industrial countries.
In this country, economists who have served both Republican and Democratic administrations have also complimented the idea, saying a consumption tax would be a very efficient method to help eat into deficits.
But, even with that popularity among economists, the proposal has yet to really gain much traction among lawmakers, with Republicans essentially calling a consumption tax an ATM that would just lead to more government spending.
Democrats, meanwhile, have expressed concern over how a consumption tax, which leads to higher prices for groceries, gas and other items, would affect the poor and the middle class.
In his 2009 piece, Krueger agreed that consumption taxes burden the poor, and that increased taxes reduce economic activity.
“But the government must make critical trade-offs, and a consumption tax could be the most efficient means to raise revenue to finance essential government functions,” he wrote. “Over time, if the budget picture improved, income taxes or corporate taxes could be reduced and the revenue replaced by the consumption tax.”
The RNC has also criticized Krueger for, among other things, his stance on cap-and-trade.